International Business Report: Risks and Family Conglomerates

This report analyzes key aspects of international business, focusing on the distinctions between advanced, developing, and emerging economies. It highlights the characteristics of each type, providing examples like Japan, China, and Mexico. The report also delves into the risks associated with emerging markets, particularly foreign exchange rate fluctuations and infrastructural challenges. Furthermore, it examines the role of family conglomerates in both developed and emerging markets, offering examples such as Reliance Industries and Volkswagen. The analysis emphasizes the significance of family-owned businesses in emerging economies and their potential for growth, referencing McKinsey & Company's research on the subject.

Running head: INTERNATIONAL BUSINESS
International Business
5/13/2019

INTERNATIONAL BUSINESS 1
1.
Advanced economy is the country that has extremely industrialized economy classically with
a huge service sector. A developed nation has high GDP per capita income and assembled
infrastructure in comparison to developing economy. Examples - Japan France, United States,
Canada, Australia
Developing economy is the market that is opposite of the advanced economy. China is said to
be the developing economy, because along with highest GDP, it also has largest population.
Other examples are India, Argentina, Jordan, Hungary (Prosser, 2012)
An emerging economy is the market that is moving in the direction of becoming developed
market at fast pace. Examples – Mexico, Brazil, Indonesia
2.
Risk and Challenges for Emerging market
Risk of Foreign exchange rate – Foreign investment in bonds as well as stock will classically
provide returns in the local or host country’s currency. As the outcome, the investor has to
change this local currency into their domestic currency.
Lack of Infrastructure – It is the fact that number of emerging markets have organized local
system of distribution such as Malaysia and India. But, Russia and China are the only nations
which lack in developed and advanced system of distribution.

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3.
A family conglomerate is said to be the corporate comprised of number of diverse, apparently
unconnected businesses and accomplished by the different generations of a single family.
Examples of Family conglomerate are Reliance Industries, Phillips 66, Tata Consultancy
Services, Nike, and Volkswagen.
In the developed markets there are less than one-third of family owned businesses, which
highlights their significant share in the market and can impact the key decisions in the
market. However, the picture in the emerging market is bit different. Around 60% of the
private sector business with the revenue of $1 billion are managed and owned by the families.
And it has been identified that these businesses will always stay major part of the national
economies in the emerging countries. As abrupt development pushes forward the emerging
areas as well as their family-owned businesses, the analysis recommends that the additional
4,000 can reach to $1 billion of the sales from 2010 to 2025 (McKinsey & Company, 2014).

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References
McKinsey & Company (2014) The family-business factor in emerging markets [online].
Available from https://www.mckinsey.com/featured-insights/winning-in-emerging-markets/
the-family-business-factor-in-emerging-markets [accessed 13 May 2019]
Prosser, M. (2012) Developed Market, Developing Market and Emerging Market Differences
[online]. Available from https://learnbonds.com/13370/developed-market-developing-
market-and-emerging-market/ [accessed 13 May 2019]